Occidental Petroleum Corporation today announced net income for the second quarter of 2018 of $848 million, or $1.10 per diluted share. Earnings for the second quarter of 2018 were adversely impacted by approximately $90 million, or $0.12 per diluted share, due to the timing of crude oil liftings in Oman and the non-cash, mark-to-market impact on crude oil volumes.

“With the early completion of our low oil price breakeven plan, outperformance across all three business segments and the expected sale of non-core domestic midstream assets, our priority is to use free cash flow to generate the greatest shareholder return,” said President and Chief Executive Officer Vicki Hollub. “We remain committed to our dividend growth, have resumed our share repurchase program and are investing in our high-return Permian assets. Our world-class assets, combined with top-performing wells and takeaway capacity, afford us the unique opportunity to enhance our leadership position in the Permian Basin.”

QUARTERLY RESULTS

Oil and Gas

Total average daily production volumes were 639,000 barrels of oil equivalent (BOE) for the second quarter of 2018, compared to 609,000 BOE in the first quarter of 2018. Permian Resources average daily production volumes improved from the prior quarter by 24,000 BOE, or 14 percent, to 201,000 BOE in the second quarter of 2018, due to improved well performance. Compared to the second quarter of 2017, Permian Resources production increased by 46 percent.

International average daily volumes increased by 8,000 BOE in the second quarter of 2018, compared to the first quarter of 2018, due to the successful completion of planned maintenance activities at Al Hosn Gas and Dolphin. The increase in Al Hosn Gas and Dolphin production was partially offset by the decrease in Qatar production for planned maintenance activities in the second quarter of 2018.

Oil and gas pre-tax income for the second quarter of 2018 was $780 million, compared to $750 million for the prior quarter. The improvement in second quarter income reflected higher oil and NGL prices as well as higher domestic production volumes, partially offset by lower international volumes due to the timing of crude oil liftings in Oman.

For the second quarter of 2018, average WTI and Brent marker prices were $67.88 per barrel and $74.90 per barrel, respectively. Average worldwide realized crude oil prices were $63.12 per barrel for the second quarter of 2018, an increase of 3 percent compared with the first quarter of 2018. Including the marketing margin from crude oil spreads between Midland and the Gulf Coast, average domestic realized crude oil prices were more than $65.00 per barrel in the second quarter of 2018, an increase of 7 percent compared to the prior quarter.

Chemical

The Chemical segment had another quarter of record earnings. Chemical pre-tax income for the second quarter of 2018 was $317 million, which came in above guidance of $300 million. The increase in second quarter earnings, compared to pre-tax income of $298 million in the first quarter of 2018, was primarily due to higher realized prices and volumes across many core product lines and favorable plant margins, as ethylene costs were significantly lower than anticipated.

Midstream and Marketing

Midstream pre-tax income for the second quarter of 2018 was $250 million, compared to $179 million for the prior quarter. Income for the first quarter of 2018 included a $43 million pre-tax gain on the sale of interests in a gas plant. Excluding the first quarter gain, the increase in second quarter income reflected record earnings in the marketing business as it earned higher marketing margins from improved crude oil spreads, partially offset by the non-cash, mark-to-market impact on crude oil volumes.

Occidental has agreed to monetize certain non-core domestic midstream assets, which were classified as assets and liabilities held for sale on the balance sheet at June 30, 2018. These assets included the Centurion common carrier oil pipeline and storage system, the Southeast New Mexico oil gathering system and the Ingleside Crude Terminal. Following the transaction, Occidental will retain its long-term flow assurance, pipeline takeaway and export capacity through its retained marketing business.